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Fed's Kashkari says rise in inflation will trigger rate hike

Tue, May 10, 2016 - 6:17 AM

The Federal Reserve should raise US interest rates before inflation reaches the Fed's 2 per cent goal, given the lags with which monetary policy affect the economy, a top US central banker said on Monday.

PHOTO: REUTERS

[MINNEAPOLIS] The Federal Reserve should raise US interest rates before inflation reaches the Fed's 2 per cent goal, given the lags with which monetary policy affect the economy, a top US central banker said on Monday.

"It's not so much, do we let it go above 2 per cent and then keep accommodative policy and not respond to that," Minneapolis Fed President Neel Kashkari told reporters after a speech at the Economic Club of Minnesota.

"If we see it start moving towards 2 per cent and we have confidence that the data is real, I would then expect to see less accommodative policy, just because people are afraid of how big the overshoot is going to be."